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The Canada Pension Plan (CPP) is at a unique point in its history. Mandatory for all Canadians, the CPP allows working Canadians to retire with a minimum income in addition to their company pensions, life savings and real estate equity.

A severe recession could drive the plan into negative territory, necessitating a rise in the premiumsthat workers and employers pay — without making any changes to the benefits that retirees receive from the Canadian Pension Plan.

Alternatively, during a severe recession the government could simply lower the monthly benefit payment by a fractional amount in order to keep the CPP fully-funded — without making any changes to the premiums that workers and employers pay to fund the Canadian Pension Plan.

So, with a bit of wind in the sails (but not that much) why are we looking at possible changes to the CPP?

1) There is a minor political suggestion to take advantage of the 1 percent profit the plan presently generates and lower CPP premiums by some fraction. It looks like honest stewardship of public accounts on the part of the government.

However, by reducing worker and employer contributions the plan could soon find itself in jeopardy during an economic downturn and at the worst possible moment for Canadian workers and business it would need to raise premiums to meet future liabilities.

It’s a nice idea and if the investment was generating 10 percent or 20 percent more than its expected future liabilities, it might be worth a look. But it’s not. So let’s file that suggestion until such times as the CPP investment pool is earning outrageous profit and workers demand lower premiums.

2) Another suggestion that has been floated, and that is to slightly increase CPP premiums in order to increase the monthly benefit (the payment) which is paid to Canada’s senior citizens. In such cases, the benefit would increase after a minimum 3-year delay in order to ‘build-up’ enough capital to cover the increased benefit amount.

Which is a tempting idea, actually. The costs of living anywhere, but especially in cities like Vancouver, Toronto and Montreal are skyrocketing, and senior citizens who live on a fixed income might find that an extra $100. per month (for example) can make the difference between eating well and paying for their herbal supplements, walkers, or other health-based assists that may be helping them, or not being able to afford them.

As the cost of living continues to rise over the decades, shouldn’t we at least think about increasing the CPP premiums by 1 percent that workers and employers pay? After all, eventually every one of us will retire and some or much of our retirement income may come from CPP.

Those retirees without company pensions, significant savings or real estate holdings, would really benefit from the extra monthly benefit amount, while those who are financially well-off may reject the idea that they should pay an extra 1 percent towards their CPP payroll deductions during their working years.

It’s an absolute no-brainer for those in the bottom two economic quintiles while those in the top three quintiles may scoff at the suggestion that a (for example) 1 percent premium increase which would result in higher monthly benefit amounts paid to them after their retirement, needs to be legislated into existence.

3) The third suggestion is for provincial pension plans that work in conjunction with CPP, the federal retirement plan. Quebec has its own plan, Ontario has just passed its own plan and other provinces are watching with interest.

Province Passes Ontario Retirement Pension Plan Act – June 1, 2016

Strengthening the retirement income system is critical to the future prosperity of the province. Studies show that many of today’s workers are not saving enough to maintain their standard of living in retirement. Pension coverage is also low for many Ontarians, with only one in four younger workers — aged 25 to 34 — participating in a workplace pension plan. — Province of Ontario | Newsroom

For retired people who have lived in the bottom 2 quintiles for most of their life and may not have a generous company pension, or do not have significant life savings, or do not have valuable real estate holdings that they can liquidate in order to live a fulfilling life, receiving a provincial monthly benefit in addition to Canada’s CPP benefit would dramatically improve their retirement.

It’s not such a big step as some may imagine. Provinces and the federal government charge and collect sales taxes, both levels of government have their own income tax system, and in many ways both the feds and the provinces work together to assure the health and safety of Canadians.

All that needs to be done is to write the necessary legislation (or simply photocopy Ontario’s system) and enact it in each province.

While retirees may not end up receiving two identical monthly benefit payments, even an extra (for example) $500. per month from a provincial pension plan, when coupled to their CPP pension monthly benefit payment, can make all the difference in the world to tomorrows retirees. Especially for seniors whose life partner (and co-payer) has passed away, an extra monthly payment can really make a difference in their lives.

4) Finally, no matter which way it goes with regards to the above points #1, #2, and #3, I hope federal government policymakers take this next suggestion seriously…

During retirement years it is expected that one spouse will pass away before the other — leaving the other to not only grieve, but to also suddenly face a major change in their monthly income.

I respectfully suggest that CPP legislation be changed to ease the suffering of suddenly widowed pensioners by allowing their (deceased) spouse’ normal monthly benefit payments to continue for a full 12 months following the death of their spouse.

That way, the remaining spouse won’t have to face both bereavement and a possible address change due to the sudden drop in income.

Canada could show that courtesy to recently bereaved pensioners now — and it wouldn’t even cost .1 percent — let alone a full 1 percent of the profit that the CPP investment pool presently generates.

We are indeed fortunate to live in this great country, and looking after our senior citizens — the very people who helped to build this great land into what it is today, should always be our first priority.

The Energy East pipeline only makes sense if global oil prices rise past $80 per barrel and there’s no guarantee we’ll see anything like that before 2020.

Crude Oil forecast 2016-2020: Crude oil is expected to trade at $35.00 per barrel by the end of this quarter, according to Trading Economics global macro models, and analyst expectations. Looking forward, we estimate it at $29.50 in 12 months’ time.

Meanwhile, Iran is set to add 3.5 million barrels per day by 2020 to the global oil markets which will easily meet (practically) flat demand, keeping oil prices below $80/bbl.

Not only that, Iranian crude oil is either #2 (sweet) or #3 (sweet) while Alberta’s oil ranges from #4 (sour) to off-the-scale sour. Alberta’s crude is so sour that it must be blended with #3 (sweet) or better before refineries will accept it.

Why would any refinery want to buy Canadian sour crude when they can buy Saudi #3 (sweet) or Iran #3 (sweet) for the same, or lower price? Alberta’s crude sits at an average of #4.75 (sour) with two other negatives attached — much higher extraction costs (the average Alberta extraction cost is $56.20 per barrel) along with higher refining costs.

What would capture the interest of voters, would be the Alberta government guaranteeing the financing of oil refineries located within and sized to accommodate the needs of each Canadian province.

Each province could have it’s own refining capacity sufficient to meet 100% of annual provincial demand — plus 30% (for export) to bordering U.S. states.

Existing rail links can already get the crude oil to existing refineries and to thefuture refineries proposed in this blog post. For those worried about oil spills when shipping by rail, they are usually limited to a few rail tanker cars and are microscopic when compared to pipeline spills.

Instead of being ‘hewers of wood and drawers of water’ how about some value-added contributions to our economy by building our Canadian refining capacity, and doing some much needed value-adding to our petroleum exports?

Energy East pipeline: Good case, or lost cause? In 2006, the Alberta resource sector contributed 40% of provincial government revenue. It has fallen to 6% in one decade and is still falling. Image courtesy of MACLEAN’S.

Through no fault of their own, the Alberta government headed by Premier Rachel Notley is facing economic crisis due to the lowest global oil prices in years, and with lower prices ahead it goes without saying that Premier Notley and her new government need to either (a) cut spending or (b) boost government revenue.

If boosting government revenue is chosen, economists know there are only three ways for provincial governments to boost revenues;

Raise taxation revenue

Raise non-taxation revenue

Transfers from the federal government

Let’s forget about putting any more holes in the Alberta economy via increased taxation as the province’s economy is under enough stress since the oil price crash.

Let’s also rule out the return of higher oil prices as oil prices are settling in for a long term run in the $30.-50. per barrel range. Why rule that out?

Simple. Millions of barrels of formerly sanctioned Iranian oil are about to hit the market, hard

For nearly a decade, Iran was sanctioned by Western nations and able to sell only small amounts of oil in the global marketplace. But the sanctions didn’t stop Iran from continuing to develop its oil industry, nor did it stop Iran from buying every spare oil tanker and storing their crude at sea, and in thousands of oil storage tanks on land until sanctions ended.

All of which is about to hit the global oil market.

‘Ready to Ship’ is perhaps an understatement as the sanctions scored a direct hit on the Iranian economy, consequently the country is very motivated to resume normal trade.

And let’s not forget the ‘wellhead price’ of oil in all of this

At the Alberta oil sands, the average extraction price for a barrel of crude oil is $56.20. That’s the average price. At some locations the extraction price can surpass $90./bbl.

In Saudi Arabia, still the world’s largest single oil producer, the wellhead price ranges between $14./bbl and $24./bbl (for #3-4 crude) and they can stand $40./bbl oil prices indefinitely. The Saudi producers don’t care how much the oil speculators are making, as long as the price remains somewhat over $24./bbl, they’re seeing profit.

But in Iran… wait for it… the wellhead price ranges from $1./bbl to $21./bbl and they have the world’s fourth-largest proved oil reserves.

Cost of oil production (Due to sanctions at the time this chart was created Iran wasn’t included in the data) Image courtesy of Der Spiegel

Most Alberta oil may be best termed #4 (sour) on the pH scale, tar sands oil can only be called #4.5 or #4.75 and all Alberta crude oil is so sour that it must be blended with liberal amounts of Saudi #3 (sweet) or West Texas Intermediate before any refinery will accept it.

Much of Iran’s oil is of the #3 (sweet) variety, but unlike the situation in other oil-producing nations where most of the #2(sweet) crude oil was extracted long ago, Iran ranks a close 2nd to Saudi Arabia in proved reserves of #2 crude oil — a perfect match to blend with Alberta’s sour crude.

Therefore, plenty of sweet and cheap-to-produce Iranian oil is about to arrive on the scene and I wouldn’t be surprised to see oil dipping to $28./bbl for a week or two once Iran’s oil exports begin impacting the market.

With the foregoing in mind, let’s look at three ways to boost the Alberta economy:

1. Alberta can still retain its ranking as an energy superpower in the coming decade of depressed oil prices by adding hundreds of wind turbines to the many wind corridors in the province

The Highway 2 corridor starting at the U.S. border heading north to Edmonton (and perhaps as far north as Athabasca) consists of rolling farmland with excellent wind potential. Any Albertan can tell you about the year-round winds native to that corridor, although they may not refer to it as a ‘wind opportunity’ in the same glowing terms as a wind turbine salesperson might…

Farmers can benefit by allowing wind turbines to be installed on their land.

Each wind turbine requires one acre of land (including service road) which makes that land unavailable for crops, therefore, utilities typically lease the land at $4000. per year/per unit.

Some farmers may allow five, ten, or any number of wind turbines on their property.

And good for them! They lose the ability to grow crops or graze their livestock on a fraction of their land, but unlike cash crop income, the wind tower lease payments are guaranteed regardless of the drought or flood situation.

And that non-weather-dependent annual revenue helps to stabilize farm income.

By selling GigaWatts(GW) of clean electricity to residents, businesses, industry, and via electricity exports to British Columbia, Saskatchewan, and to the northern United States, Alberta would retain its place as an energy superpower — regardless of the global oil price.

And we must always heed the words of Saudi Oil Minister, Ali Al-Naimi, “The Stone Age didn’t end on account of a lack of stones, nor will the Oil Age end on account of a lack of oil.”

The end of oil is coming. We need to begin planning for it. An energy grid that meets demand with 50% natural gas and 50% renewable energy and is strongly geared towards electricity exports is in our best economic and employment interests. The sooner we begin to walk that path, the farther ahead of other regional economies we’ll be.

Or, Alberta could drop the ball completely and become an energy importer from places like British Columbia, Saskatchewan, and the northern U.S. states. That might be a little too ironic for some Albertans.

A great way to create thousands of good-paying jobs in Alberta, not only installer jobs but wind turbine and tower manufacturing jobs, is by negotiating with wind turbine manufacturers, and separately, wind tower manufacturers, to build assembly plants in Alberta.

If all the stars aligned, the province could become the defacto capital of Canada for wind turbine and wind tower manufacturing.

And the province has the potential to become an important centre for wind power technologies, by providing the proper funding to the Northern Alberta Institute of Technology (NAIT) and the Southern Alberta Institute of Technology (SAIT).

There isn’t a reason good enough to prevent Alberta from installing 1000 wind turbines per year within its provincial boundaries AND selling another 1000 wind turbines and towers per year to other jurisdictions in Canada. That’s just the Canadian market, and quite separate from the true north strong and free there’s a big windy world out there.

More jobs, guaranteed income for farmers, cleaner air via clean electricity generation, a better economy due to massive electricity exports and higher tax revenues… what’s not to like about wind power in Alberta?

2. Natural Gas as a baseload energy fuel

Due to historical factors, such as the historically low cost and low technology required to produce heat and electricity from coal, (and also due to the low price of massively-subsidized nuclear power) natural gas became a sort of ’boutique’ fuel used to produce power at so-called ‘peaking’ power plants.

Henry Hub gas price to December 2015. Prices are projected to continue dropping. (At less than $2.00 natural gas becomes competitive with coal-fired power generation) Image courtesy of Plattts

Whenever the coal or nuclear power plants couldn’t meet peak demand, say during summer afternoons when every air conditioning unit was working at maximum capacity, peaking power plants could quickly ramp-up to meet peak demand.

Natural gas power plants can ramp-up or down in minutes, as opposed to coal-fired power generation or to nuclear powered generation, which can take hours or days to ramp-up or down.

With much lower natural gas prices (below $2.00 on the Henry Hub index as of 12/28/15) a huge window of opportunity exists for non-centralized natural gas-fired power generation to enter the energy market as an equal player instead of as a pinch-hitter.

Due to ever-stricter clean air standards and the concerns surrounding global warming, and the obscene water usage of coal-fired and nuclear power plants, natural gas looks to replace coal and nuclear saving billions of subsidy dollars in the process.

Water usage by type of power plant.

Use a cleaner fuel for a cleaner burn

Modern natural gas-fired power generation releases less than half the amount of CO2 as compared to coal-fired power generation.

And that’s just the story on Carbon Dioxide emissions.

It’s the other emissions that are the real problem with coal-fired power generation; It’s things like airborne mercury and heavy metal vapours, sulfur dioxide, oxides of nitrogen and particulate (smoke, ash, and soot) that are the real nasties.

Then there are the thousands of tons (Alberta only) or millions of tons (globally) of fly ash that must be transported and safely buried annually, far from aquifers.

The good news is that natural gas burns up to 1,000,000 times cleaner than brown coal (lignite) and up to 10,000 times cleaner than the cleanest-burning grade of coal (anthracite).

“Each stage in the life cycle of coal—extraction, transport, processing, and combustion—generates a waste stream and carries multiple hazards for health and the environment.

These costs are external to the coal industry and are thus often considered “externalities.”

We estimate that the life cycle effects of coal and the waste stream generated are costing the U.S. public a third to one-half of a trillion dollars annually.

Many of these so-called externalities are, moreover, cumulative.

Accounting for the damages conservatively doubles to triples the price of electricity from coal per kWh generated, making wind, solar, and other forms of nonfossil fuel power generation, along with investments in efficiency and electricity conservation methods, economically competitive.” — Harvard Medicine | Full Lifecycle of coal

As for matching up with wind power, there isn’t a better partner than natural gas-fired power generation. In perfect harmony, natural gas can ramp-up and ramp-down on a minute-by-minute basis to meet Alberta’s electricity demand and can add capacity to electricity exports.

3. Promote Alberta Tourism in a Massive Way

Until now, provinces like British Columbia, Ontario, and Quebec have dominated the Canadian tourism market. And millions of tourists visit British Columbia without ever knowing about the jewel of a province next-door. That must change in 2016.

BC and Alberta must become partners in attracting touristsby launching complementary tourism campaigns in foreign countries — making it seem to prospective tourists that there are so many reasons to visit Western Canada that they decide to visit both provinces and forego travelling anywhere else.

In what other country can you take a cruise ship to a major cosmopolitan city like Vancouver, golf in the morning, ski in the afternoon, enjoy fine dining at night, then hop onboard a scenic VIA RAIL train to Banff, Alberta?

There you can enjoy ice-skating, snowboarding and cross-country skiing or nature hikes, and of course, more fine dining.

I hope Premier Notley makes tourism one of the first priorities of her government in 2016 — even as she works out longer-term and higher reward arrangements to secure a better energy future for Alberta.